The risk of peanut-butter costing rises when broad averages are used across multiple products without managers considering the true amounts of resources consumed in the making of each product.

Question

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When broad averages are used, it may not accurately reflect the true cost of resources consumed in the production of each individual product. This can lead to a potential rise in the cost of certain products, such as peanut butter, if their actual resource consumption is not properly accounted for by managers.

The Risk of Peanut-Butter Costing Rises When Broad Averages Are